Trump's cut to flood map program could trigger insurance rate hikes: group

[March 21, 2017]  By Suzanne Barlyn

(Reuters) - A proposal by the Trump administration to cut $190 million in funding for updating U.S. maps of flood-prone areas would trigger higher insurance rates or more homebuilding in risky locations, a consumer group said on Monday.

Flood-mapping provides important details about where it is safe to build, whether flood insurance is needed and how to price coverage, Robert Hunter, director of insurance for the Consumer Federation of America, said in a statement.

Slashing funding for the National Flood Insurance Program's (NFIP) retooling of U.S. flood maps will lead to relying on old maps and construction in areas that are now flood prone, or hiking insurance premiums to pay for new maps, Hunter said.

The White House 2018 budget, unveiled last Thursday, would eliminate a $190 million "discretionary appropriation" for the National Flood Insurance Program's (NFIP) updating of U.S. flood maps and "explore other more effective and fair means of funding flood mapping efforts."

Costs for mapping have been shared by insurance policyholders and the federal government for the past 15 years, said a spokeswoman for the Federal Emergency Management (FEMA), which operates the flood insurance program.

"The president’s budget directs us to explore avenues to shift these costs away from general appropriations," the FEMA spokeswoman said.

Updating U.S. flood maps is seen by consumer and insurance industry advocates as a necessary step toward modernizing the U.S. flood insurance market.

The White House 2018 budget is the first step in a long process that will be debated by U.S. lawmakers.

Vehicles are seen partially submerged in flood water at William Street Park after heavy rains overflowed nearby Coyote Creek in San Jose, California, U.S., February 21, 2017. REUTERS/Stephen Lam

The NFIP, whose authorization is set to expire in September, could face other sweeping changes. The program is $24.6 billion in debt to the U.S. Treasury Department, the FEMA spokeswoman said.

Insurance industry groups are also concerned about the mapping proposal. "Understandably, we’re all concerned about the potential to undermine efforts to modernize the maps," said Leigh Ann Pusey, president and chief executive officer of the American Insurance Association.

Still, the budget process is at an early stage, Pusey said.

(Reporting by Suzanne Barlyn; Additional reporting by Roberta Rampton in Washington; Editing by Leslie Adler)

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